Railway Stock in Focus After Receiving Revised Order Worth ₹750 Cr from South Western Railway

Synopsis: Leading transport and consultancy company has received revised estimates from South Western Railway for an ongoing railway electrification project in southern India. The update reflects a change in the project cost while the execution of the electrification work continues as planned. 

The shares of this smallcap company majorly engaged in transport consultancy services, turnkey and exports, were in focus after getting revised estimate for the electrification project from Indian Railways.

With the market capitalization of Rs. 9,665 Crores, the shares of Rites Ltd  were trading at around Rs. 201 per share which is 36 percent discount from its 52 weeks high of Rs. 316 per share and is trading at a P/E of 23.4 whereas industry P/E stands at 14.8 

News

RITES Limited had earlier received orders for railway electrification work from the Ministry of Railways, covering various routes including Mysuru-Hassan-Mangaluru, including Hassan-Arsikere, and Kadur-Chikmagalur. As per the latest filings the project, earlier valued at about  Rs. 461.23 crore, has now been revised estimated value of Rs. 749.67 Crore. 

Additionally, the company has also received a contract from the Government of West Bengal worth Rs. 45.18 Crore for consultancy services as Project Management Consultant in connection with the construction of a proposed 4-lane extra-dosed bridge over the river Muriganga, including approaches connecting Kachuberia (Sagar Island) with Kakdwip in the district of South 24 Parganas which would be executed in a period of 48 months 

Financials

Rites Ltd, majorly engaged in transport consultancy services, turnkey, and exports has an order book of Rs. 9262 Crore as Q3 FY26. The company is majorly into four business segments which includes Consultancy, Lease, Export, Turnkey. 48 percent of the revenue is contributed by consultancy, whereas Turnkey, export, and lease contribute 28.5 percent, 10.28 percent, lease 7.13 percent respectively. Consultancy and lease segment has the highest margin of profits followed by export and turnkey. 

Out of Rs. 9262 Crore order book Consultancy contributes  Rs. 2739 Crore, Turnkey contributes Rs. 4532 Crore followed by followed by exports, lease, REMC Ltd of Rs. 1708 Crore, Rs. 163 Crore, Rs. 120 Crore respectively. 

Year on year analysis: Revenue from operations has increased from Rs. 576 Crore to Rs. 609 Crore, up 5.7 percent. Operating profit has increased from Rs. 117 Crore to Rs. 142 Crore, up 21.3 percent and net profit has increased from Rs. 109 Crores to Rs. 115 Crores, up 5.5 percent. 

Quarter on Quarter analysis: Revenue from operations has increased from Rs. 549 Crores to Rs. 609 Crores, up 10.9 percent. Operating profit has increased from Rs. 130 Crores to Rs. 142 Crores, up 9.23 percent and net-profit has increased from Rs. 109 Crores to Rs. 115 Crores, up 5.5 percent  

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